Quantum`s hard disk drive (HDD) division is to merge with Maxtor under the Maxtor name. The new company will have a combined market capitalisation of $2 billion and annual sales of $6 billion.
Quantum`s stockholders will receive 1.52 shares of Maxtor common stock for every share of Quantum HDD common stock they own. Based on the current market capitalisations of Maxtor and Quantum HDD, the transaction is valued at approximately $2.3 billion.
"This is a bold and strategic step for both companies," says Mike Cannon, Maxtor`s president and CEO. "The combined company will have the financial resources, product breadth and intellectual property to capitalise on the future explosive growth of storage at both the storage device and subsystem levels."
According to a company spokesman, the respective divisions of the two HDD manufacturers will continue with "business as normal" for at least six months while the new company is named and operating structures are established. It is expected that the merger will be completed early in 2001.
The company`s tape business, Quantum DSS, will not be affected by the merger, and will continue trading as it is, with CEO Michael Brown still at the helm. Brown will join the board of directors of the new company.
The move is intended to create a stronger base in the disk drive market, where margins continue to shrink and disk volumes increase, while increasing shareholder value and customer benefits. The move will allow the new company to invest in new market opportunities in storage while reducing expenditure.
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